Streaming audio player Pandora has increasingly focused on building ad revenues from the local level up but has met with some hurdles in trying to pry ad dollars from the $15 billion terrestrial radio market.
This week it struck deals with two media buying and planning software providers, Mediaocean and STRATA , which Pandora hopes will simplify the process of buying local audio ads.
"We knew that a substantial portion of the $15 billion radio market is bought through automated systems," Doug Sterne, VP of audio sales at Pandora, told AdExchanger. "About 70% of all spot radio is transacted through those systems. So we're trying to duplicate the workflow associated with buying radio. Using Mediaocean and STRATA will allow us to directly tap that pipeline of spending."
At the moment, Pandora gets about half its revenues from audio ads, with the other half coming from display and video ads. When Oakland-based Pandora was founded in 2000, the company's revenue model was strictly display and PC-oriented. The explosion of smartphone usage has changed the company's business focus to mobile advertising. Though Sterne says that the company is still developing new display and video ad units, local and mobile is where the present and future lie for Pandora.
"We currently have sales team coverage in 29 of the top 100 markets in the US and we are working to get up to 50 markets over the next few months," Sterne said. "And the markets are actually catching up to the idea of streaming audio ad sales. When we began working with Triton, they measured only 10 markets. They now cover 100 markets. By this summer, they'll cover all 276 markets. That will also help scale our audio ad business."
Since Pandora itself can't have on-the-ground sales people in those dozens of markets, the next best thing is having Mediaocean and STRATA, with their software connections to agencies, connecting Pandora virtually instead of physically to buyers.
"Our pitch to advertisers is that we are just like radio, but more ubiquitous," Sterne said. "People wake up to Pandora on their smartphones and plug it into the car as they head to work. They have Pandora on their desktop during the day and come home and listen on their tablet. Advertisers want to be able to follow that user all the way through, and we're making to make that process less costly and faster. That's a continuing process for us."